Management Discussion and Analysis
The Company had the operating result in which the equity method is applied for the year ended December 31, 2015, which has net income of Baht 179.51 million, decreased by Baht 205.44 million or 53.37 % compared with a net income of Baht 384.95 million in the same period last year and recorded the retained earnings as at December 31, 2015 of Baht 291.46 million with the following details:
for the year ended December 31, 2015 of Baht 1,265.20 million, decreased by Baht 335.17 million or 20.94 % compared with Baht 1,600.37 million in the same period last year, with the following details:
|Securities Business Revenues||FOR THE YEAR ENDED DECEMBER 31,|
|Fees and services income||61,142,783||4.83||61,716,999||3.86||39,588,808||1.91|
|Gain on investments||113,945,907||9.01||99,042,759||6.19||66,150,446||3.20|
|Gain on derivatives||3,590,620||0.29||3,162,726||0.20||19,723,499||0.95|
|Interest and dividends||56,722,593||4.49||68,289,745||4.27||90,959,489||4.40|
|Interest on margin loans||46,334,794||3.66||45,069,986||2.81||56,604,590||2.74|
|Total securities business revenues||1,150,235,873||90.92||1,301,986,767||81.36||1,968,706,918||95.16|
|Share of profit (loss) from investments for using equity method||(4,278,076)||(0.34)||60,406,932||3.77||86,424,302||4.18|
|Profit from sales of investments in associated companies||103,777,239||8.20||-||-||-||-|
- Total securities business revenue was Baht 1,150.24 million decreased by Baht 151.75 million or 11.66 % compared with Baht 1,301.99 million in the same period last year. The decrease mostly resulted from:
- Brokerage fees of Baht 868.50 million, decreased by Baht 156.20 million or 15.24 % compared with Baht 1,024.70 million in the same period last year, This resulted from a decrease in securities customer’s trading volume, in line with the decrease in SET’s trading volume and also the resignation of chief executive and marketing staff.
- Fees and services income of Baht 61.14 million, decreased by Baht 0.58 million or 0.94 % compared with Baht 61.72 million in the same period last year mainly due to an decrease in income from brokerage fees and fees and services income decreased by Baht 17.61 million, Meanwhile, financial advisory fees increased by Baht 17.01 million.
- Gain on investments and derivatives of Baht 117.54 million, increased by Baht 16.33 million or 15.00% compared with Baht 102.21 million in the same period last year. This was due to an increase in gain on sale of securities of Baht 31.80 million, and unrealized losses from the value of trading investments increased by Baht 17.01 million.
- Interest and dividends income of Baht 56.72 million, decreased by Baht 11.57 million or 16.94 % compared with Baht 68.29 million in the same period last year. This mainly resulted from a decrease in interest income from money deposited in financial institutions of Baht 10.48 million due to lower average market interest rate.
- Share of profit from investment for using equity method Baht 4.28 million decreased by Baht 64.69 million or 107.08 % compared with Baht 60.41 million in the same period last year. On March 5, 2015, the Company sold the above investment in MFC Asset Management Public Company Limited to Country Group Holdings PCL. The Company recognized share of profit from investments Baht 6.98 million compared with Baht 60.41 million in the same period last year.
- Other income of Baht 15.47 million, decreased by Baht 222.51 million or 93.50 % compared with Baht 237.98 million in the same period last year mainly due to The company recorded a reversal of investment impairments in the associated company of Baht 205.59 million because the associated company’s fair value was higher than book value and the employer’s contribution and its benefit of provident fund members who were not entitled due to resignation of Chief Executive Officer and marketing staff.
for year ended 31 December 2015 , the Company had total expenses Baht 1,032.63 million, decreased by Baht 103.05 million or 9.07 % compared with Baht 1,135.68 million in the same period last year, which mainly resulted from
Unit : Baht
|Expenses||FOR THE YEAR ENDED DECEMBER 31,|
|Fee and service expenses||101,544,648||8.03||105,938,478||6.62||156,610,947||7.57|
|Premises and equipment expenses||150,211,144||11.87||170,039,332||10.63||194,926,006||9.42|
|Total Operating expenses||914,212,590||72.26||1,005,789,257||62.85||1,422,994,375||68.78|
|Bad debt and doubtful accounts (reversal)||(3,501,740)||(0.28)||2,874,350||0.18||15,931,601||0.77|
- Fee and service expenses of Baht 101.54 million, decreased by Baht 4.40 million or 4.15 % compared with Baht 105.94 million in the same period last year which varied in line with the decrease in securities and derivatives trading volume.
- Operating expenses of Baht 914.21 million, decreased by Baht 91.58 million or 9.11 % compared with Baht 1,005.79 million in the same period last year due mainly to a decrease in personnel expenses which varied according to the decrease in securities and derivatives trading volume i.e. marketing incentives and profit sharing from branches/marketing team management, etc. Furthermore, the operating expenses decreased due to the decrease of branches and the resignation of chief executive and marketing staff which decrease the operating expenses i.e. salary, bonus and property, premises and equipment expenses etc.
- Bad debt and doubtful accounts (reversal) was Baht 3.50 million. Mainly due to the company’s existing debtors’ collateral value has decreased.
Summary of Net Profit
From the consolidated financial statement for year ended 31 December 2015, the Company had net profit of Baht 179.51 million (net profit Baht 0.069 per share) decreased by Baht 205.44 million or 53.37 % compare with the same period last year which was Baht 384.95 million (net profit Baht 0.149 per share). Furthermore, the Company s net profit ratio was 14.19 % which decreased from last year with net profit ratio of 24.05 % Total revenues for the year 2015 was decreased by Baht 355.17 million or 20.94 % whereas total expenses was decreased by Baht 103.05 million or 9.07 %. As the result of net profit decreased, return on equity ratio was 5.53 % compared with the previous year which was 11.21 %.
|Assets||AS AT DECEMBER 31,|
|Cash and cash equivalents||1,385,440,714||33.88||1,144,607,815||19.88||1,073,087,608||22.60|
|Deposits at financial institutions||69,310,000||1.70||269,310,000||4.68||569,310,000||11.99|
|Receivables from Clearing House||46,596,468||1.14||32,189,616||0.56||442,940,349||9.33|
|Securities and derivatives business
receivables - net
|Investments - net||392,741,224||9.60||975,606,502||16.94||237,449,760||5.00|
|Investments in associated companies - net||485,311,836||11.87||546,612,943||9.49||340,153,559||7.17|
|Property, premises and equipment - net||139,248,274||3.41||152,259,533||2.65||186,622,547||3.93|
|Intangible assets - net||102,408,524||2.50||98,225,958||1.71||96,575,450||2.03|
|Deferred tax assets||106,711,815||2.61||107,331,535||1.86||143,055,030||3.01|
|Other assets - net||117,383,553||2.87||127,419,856||2.21||127,887,922||2.69|
As of 31 December 2015, total assets of the Company were Baht 4,089.03 million, decreased by Baht 1,668.76 million or 28.98 % from last year which was Baht 5,757.79 million. The Company’s total asset consist of cash and cash equivalents were 33.88 % ,Deposits at financial institutions was 1.70 %, Net securities and derivatives business receivables were 30.42 %, Net investment was 9.60 %, Net investment in associated company was 11.87 %, Net property, premises and equipment were 5.91 %and the remaining of 6.62 %were Receivables from Clearing House, deferred tax assets, and other assets.
The changes in assets can be summarized as follows:
- Cash and cash equivalents and Deposits at financial institutions as of 31 December 2015 were Baht 1,454.75 million, increased by Baht 40.83 million or 2.89 % compared with Baht 1,413.92 million in the previous year. Most of Cash and cash equivalents and deposits at financial institutions were in form of cash, short-term deposits, fixed deposit and certificate of deposit, which convenience to utilize as working capital for daily operations.
- Net securities and derivatives business receivable as of 31 December 2015 were 1,243.87 million, decreased by Baht 1,060.35 million or 46.02
%compared with Baht 2,304.22 million last year. Net securities and derivatives business receivable were decreased, mainly due to an decrease in receivable of Customers’ cash accounts was Baht 916.98 million. Net securities and derivatives business receivable had direct relationship with trading value of the last 3 days before the end of year.
In relation to the Company’s policy on allowance for doubtful accounts, the Company has provided an allowance based on a review of debtor’s repayment capability, taking into consideration risk in recovery and value of collateral. Additionally, the Company has conservatively set the allowance for doubtful accounts based on a high of degree of uncertainty that principal and interest will be received and the doubtful debts are not fully covered by collateral. The allowance for doubtful accounts is classified by SEC’s notifications No. Gor Thor.33/2543 and Kor Thor. 5/2544 dated August 25, 2000 and February 15, 2001, respectively.
The details of the allowance for doubtful of the Company’s subsidiary as at 31 December 2015 are as follows:
- Net investment as at 31 December 2015 was Baht 392.74 million, increased by Baht 582.87 million or 59.74 % compared with Baht 975.61 last year. Net investment was decreased because the Company invested more in deb instrument of Baht 357.00 million and available for sale -listed securities of Baht 225.32 million. The Company consisted of 84.47 %s ales of trading investments, 10.23 % of available for sale investment, and 5.30 %of general investment. Most of investments are in form of listed securities and unit trust that in need of the market. The Company has set up investment committee to monitor and establish guidelines for equity securities investment of the Company account. Also The Company has realized the allowance for diminution in value of investments and allowance for impairment according to accounting standard and announcement of SEC.
|Period of overdue||Number||Debts Amount (Million Baht)||Collateral (Million Baht)||Net Debts (Million Baht)||Allowance for doubtful (Million Baht)||Result of collection|
|1 - 3 months||-||-||-||-|
|> 3 < = 6 months||-||-||-||-|
|> 6 < = 12 months||-||-||-||-|
|> 12 < = 24 months||-||-||-||-|
|More than 24 months||39||13.60||-||13.60||13.60||27 accounts are under follow up and 12 accounts are under litigations process|
|1 - 3 months||-||-||-||-|
|> 3 < = 6 months||-||-||-||-|
|> 6 < = 12 months||-||-||-||-|
|> 12 < = 24 months||-||-||-||-|
|More than 24 months||9||383.65||44.93||338.72||338.72||under litigations process|
|Liabilities||AS AT DECEMBER 31,|
|Payables to Clearing House||235,432,799||5.76||187,679,778||3.26||25,096,463||0.53|
|Securities business payables||674,374,173||16.49||1,846,213,834||32.06||1,129,699,869||23.79|
|Derivatives business payables||-||-||-||-||57,273||0.00|
|Payables under finance leases||-||-||3,110,971||0.05||3,428,712||0.07|
|Employee benefit obligations||49,214,920||1.20||44,045,050||0.77||46,864,861||0.99|
As at 31 December 2015, the Company had total liabilities of Baht 1,080.49 million, decreased by Baht 1,188.90 million or 52.39 % compared with the previous which was Baht 2,269.39 million. Total liabilities were decreased mainly due to an increase in securities business payable of Baht 1,171.84 million as the result of securities trading value during the last 3 days before the end of year.
|Owner’s equity||AS AT DECEMBER 31,|
|Issued and paid-up share capital||2,589,743,484||63.33||2,589,743,484||44.98||2,589,743,484||54.54|
|Premium on share capital||139,078,735||3.40||139,078,735||2.42||139,078,735||2.93|
|Other component of owners' equity||(11,743,679)||(0.28)||(5,170,661)||(0.09)||(8,940,060)||(0.18)|
|Total owners' equity||3,008,534,673||73.58||3,488,394,843||60.59||3,377,602,425||71.14|
As at 31 December 2015, the owner’s equity of Baht 3,008.53 million, decreased by Baht 479.86 million or 13.76 % compared with the previous year which was Baht 3,488.39 million, mainly due to dividend payment in form of cash, amounted of Baht 652.55 Million. Moreover, the Company had an increase in retained earnings of Baht 179.51 million as at 31 December 2015.
Liquidity and Sources of Funds of the Company and its subsidiary
Sources of funds of the Company and its subsidiary are mainly from self-financed and credit line with commercial bank to support working capital of the Company and its subsidiary.
The Company’s net liquid capital ratio (NCR) was 216.39 % as at 31 December 2015. This NCR is considered high compared to the minimum NCR required by the SEC at 7 %.
Net liquid capital ratios (NCR) of the Company can be summarized as follows:
|Country Group Securities PCL||As at December 31|
|- Net liquid capital (Million Baht)||2,125.68||1,918.86||2,970.28|
|- Liabilities and collateral (Million Baht)||982.33||2,180.57||1,227.14|
|- Net liquid capital ratio (NCR)||216.39%||88.00%||242.05%|
As of 31 December 2015, the Cash Flow Statement of the Company and its assocaited exhibited that net cash flow from operating activities was Baht 541.44 million as the result of an increase in receivables net from from cash received from the sale of trading investments, amounted baht 465.60 million.
As of 31 December 2015, net cash flows used in investing activities was Baht 354.15 million, as a result of net cash received from investment and dividend from investment in securities, amounted Baht 241.58 million. Moreove net cash received from sale of investment in associate amounted Baht 648.91 million and cash outflow sales of investment in associated companies amounted Baht 496.39 million.
Net cash flows used in financing activities was Baht 654.76 million as of 31 December 31 2015. Main transaction in financing activities was cash paid for dividend payment 2014, amounted of Baht 652.55 million.
Overall, the Company has a strong financial status and high liquidity with NCR at 216.39 % (as of 31 December 2015) which was relatively high compare to 7 % NCR requirement setting by the SEC. Furthermore, the Company had cash and cash equivalent equal to Baht 1,385.44 million (33.88 %of total asset), a high liquid assets to total asset ratio equal to 42.99 % ,an income generating asset to total asset ratio equal to 65.11 and debts to equity ratio equal to 0.36. As of 31 December 2015, total shareholders’ equity was Baht 3,008.53 million and unallocated retained earnings were Baht 206.23 million. As a result, return on equity ratio increased from 5.33 % and return on investment increased was 20.26 %compared with the previous year which was 15.55 %.